19th Apr 2024 15:54
(Alliance News) - Shares in Man Group PLC came under pressure as first quarter assets under management missed City expectations, but analysts still see value in the stock.
Shares in Man Group fell 5.4% to 254.20 pence each in London on Friday.
In a trading statement, the London-based active investment manager focused on private markets disclosed assets under management on March 31 were USD175.7 billion, up 4.9% from USD167.5 billion on December 31.
Man Group said it suffered USD1.6 billion in net outflows in the first quarter of 2024, but recorded a positive investment performance of USD9.8 billion to create the rise in AuM.
UBS noted AuM were 0.5% below consensus expectations, driven by weaker than expected flows, while USD1.6 billion of outflows in the quarter, was a "sharp miss" versus the USD1.3 billion of inflows consensus forecast.
The miss was most pronounced in the absolute return strategies where USD1.3 billion of outflows were recorded against the consensus for USD0.4 billion.
UBS said the first quarter flows were a "disappointment" with only its discretionary long-only segment recording inflows.
The outflows were driven by an uptick in redemptions, USD9.7 billion versus the USD6.8 billion quarterly average in 2023.
This was likely driven by allocation decisions for a small number of institutional investors, UBS suggested, as gross inflows of USD8.1 billion were better than the 2023 run-rate of USD7.6 billion per quarter.
UBS pointed out management remains confident about the underlying client demand.
Absolute return AuMs, which command the highest fee margin, ended the quarter at USD50.3 billion, a small 0.1% miss versus consensus.
UBS rates Man Group at 'buy' with a share price target of 335 pence.
"Given the flows were driven by allocation decisions, we would view any weakness as a buying opportunity," it added.
Panmure Gordon remained positive on Man Group as well, reiterating a 'buy' rating.
"Given the mix of AuM at the end of the period not much changes for management [pretax profit] estimates; the strength of performance underpins performance fee [pretax profit] expectations; and one quarter does not make a year for flows. The shares are too lowly valued given the prospects for the group and its exemplary capital management."
Panmure said the highlight in the quarter was the strength of investment performance, adding USD9.8 billion to AuM compared with consensus of USD7.8 billion. The counter was weaker than anticipated flows, it added.
"There will be inevitable concerns expressed about one quarter's flows but the impact on estimates of a shortfall in one quarter is offset by stronger than expected performance. AuM rose by USD8 billion in the quarter which is not to be sniffed at."
By Jeremy Cutler, Alliance News reporter
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